If you’re in your early 50s, you may have fallen off the savings track — say, to cover college bills or buy a bigger house. Contributing less to your 401(k) for a few years won’t devastate your retirement prospects, especially if you started saving early. But remember that retirement is your first priority, says David Meyers, a certified financial planner in Palo Alto, Calif. “You can’t fix that. It’s harder to retire on less than to live in a smaller house.”
And at this stage, playing catch-up can be more complicated — and you may need more help. “A 25-year-old in a retirement plan can simply pick a 2065 target-date fund,” says Rob Austin, director of retirement research at Aon Hewitt, a benefits consulting firm. “But when you get to 55, one person may have paid off his mortgage, another not. One might have a huge pension, another doesn’t. ”
Enter managed accounts, offered by over half of employers as an option in their 401(k)s, according to an Aon Hewitt study. With these accounts, a professional advisory service will discuss your circumstances, perhaps both online and over the phone, and tailor a portfolio accordingly, periodically monitoring and rebalancing it.
Managed accounts offer a high degree of personal advice, so they’re most appropriate for investors who have complex finances — say, multiple 401(k)s, a pension or company stock outside their retirement account, says Sangeeta Moorjani with Fidelity’s Professional Service Group.
If you don’t have access to a managed account or want more face-to-face advice, schedule a few sessions with a financial adviser. Advisers streamline your accounts, coordinate your income and assets with those of your spouse and assess your retirement readiness. Meyers, for instance, offers a portfolio review plus Social Security planning and a retirement income analysis. “Before I dive into a portfolio, I add up all retirement assets and all nonretirement assets to get an idea of the total picture and project what it will take to achieve the level of spending the client wants in retirement.” The best part of his job? “Every now and then, I’ll look at the numbers and say, ‘You can retire yesterday.’ That’s really cool.”
Jane Bennett Clark is a senior editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to email@example.com. For more on this and similar money topics, visit kiplinger.com.